ANZ gets cards to cough up

ANZ appears to have easily sidestepped the expected profit-sapping impact of the Reserve Bank's credit card reforms, revealing that its consumer finance division, which runs the card products, was one of its best performers.

But the result has prompted criticism that consumers have borne the brunt of the reforms, as ANZ and other banks have restructured their card operations to earn revenue in new ways.

The centrepiece of the reforms has been a 40 per cent cut in interchange fees, which banks charge each other but pass on to consumers. This has cost the banks $400 million in revenue.

ANZ said in the first half its interchange revenue was down by $34 million after tax, but this was offset by a cut in the cost of loyalty programs attached to its popular co-branded Visa cards and a joint venture with Diners Club.

The most significant change has been to cap the number of points that big spending customers can earn and ANZ has been trying to switch these customers to Diners. Diners and American Express are not subject to the reforms, which were aimed at the Visa and Mastercard schemes most banks use.

ANZ's net profit from the consumer finance division, including credit cards, personal loans and merchant payment facilities, more than doubled to $104 million in the half to March 31.

Chief executive John McFarlane said ANZ had achieved better-than-expected results from the division despite the reforms and expected a $30 million after-tax hit for the full year rather than the $40 million forecast.

He said the interchange issues had been well managed and the bank had attracted a net 50,000 new customers in the half.

Westpac has indicated that the reforms will have no negative effect on its results after it restructured its card operations.

But the shadow minister for financial services, Stephen Conroy, said the Australian Competition and Consumer Commission should monitor the reforms because the banks would claw back the interchange cuts through other fees.

ANZ has increased annual and late payment fees, for example.

"The banks are finding new ways of gouging fees and charges from customers," Senator Conroy said.